And even so, Wells continues to refuse to halt foreclosures knowing full well it would face billions in impairments should it do so voluntarily, even though as we confirmed Warren Buffett's pet bank was recently caught with its robosigning pants down as well (an event which was sufficient for everyone else to invoke a self-imposed moratorium, even Goldman, whose Litton Loan Servicing unit was rumored to have serviced about 4 or 5 mortgages in the past century... but not the California real estate monster).
What is critical, is that Wells Fargo admits that should all avenues under existing legal guidelines be exhausted, and robofraud is certainly a dealbreaker that can not be "explained or validated away", then the bank will be forced to repurchase the loan. In other words, starting [Monday] Wells is preparing for the loan repurchase tsunami to hit the fan as investors and insurers everywhere swamp the bank with tens if not hundreds of billions of repurchase and recissions demands. Suck it in, Wells investors.
So the question becomes why? The answer is the end of last week forced their hands with bank stocks tanking on Thursday and Friday. Investors are spooked. A long, drawn out mess will only increase the chances that the somebody can be singled out as the next Lehman Brothers, so the best bet is everyone to pull the pins on their respective mortgage grenades at once.
Readers can be confident that over the weekend loan investors and mortgage insurers have received identical letters from all other banks as well. The next step: an attempt by every single mortgage investor and insurance company to get every single mortgage repurchased by the originating company on grounds of robosigning fraud.
The banks had their party of a lifetime, and now the terminal morning after hangover has commenced.
In other words, this is the week where the bottom starts falling out of bank stocks completely. Don your crash helmets, kids. Potential financial crisis point? Meet precipitating black swan event. The banks want this swept under the rug as a delay is only going to make things worse for them. Banks stocks are already being hurt as evidenced by the end of last week. If they figure they can, say, start a financial meltdown two weeks before midterm elections, this may motivate Washington to save their asses and make this problem go away ASAP.
Timing is everything. October? Surprise!
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1 comment:
Again, haven't the Democrats controlled Congress since 2006? Where was the oversight to prevent this? Why shouldn't this be laid at the feet of the Obama White House and the Democrats in Congress?
Why do you have such a problem with basic, obvious facts?
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